The Deal

It’s Tough to Stay on Top

Will 2015 be a comeback year for Virginia’s business world?

Will Virginia continue its slide as a top state for doing business this year?

It’s a fair question because Virginia’s corporate and economic-development elite prided itself that the state ranked nationally at or near the top for having a favorable business climate. CNBC, for instance, ranked Virginia tops in the land for business in 2011 but has given it steadily declining marks since.

Factors that had made Virginia a winner included a well-educated work force, a friendly regulatory climate, lots of federals spending and proximity to Washington and right-to-work laws that blunt labor unions.

But the Old Dominion has been sliding. In Forbes magazine’s 2014 ranking, Virginia fell to No. 4 from No. 1 because it has been “hindered in part by the budget sequestration of 2013 and reductions in government spending.” Such headwinds push against its reputation for ranking tops in regulation due to “it strong incentive offerings and business-friendly government policies,” Forbes said.

At Chief Executive magazine (I wrote for it for several years), Virginia has fallen from sixth to seventh to the 11th spot from 2012 to 2014. The tally was taken in a survey of chief executives of companies.

Over at CNBC, Virginia’s decline has been steady. While it recently reigned supreme in 2011 in CNBC’s overall rankings only to become No. 3 in 2012, No. 5 in 2013 and No. 8 in 2014. CNBC touts Virginia’s friendly business climate but it takes away points for its high costs of doing business. It also has criticized the state’s crumbling road infrastructure that has to led to, among other things, nightmarish commutes in Northern Virginia.

Another problem was raised by (believe or not) Kenneth Cuccinelli, the former and far-right attorney general.

He wrote an op-ed piece in The Richmond Times-Dispatch that Virginia is way behind the times when it comes to adapting its regulatory policies to promising new, technology-driven companies, such as people carriers Uber and Lyft. Cuccinelli hit the Department of Motor Vehicles for harassing the two popular companies by forcing them “to conform to Virginia’s 19th century-era regulatory structure.”

How’s 2015 shaping up in rankings? Not well. The state ranks in the bottom three of 50 states in job growth along with Maryland and the District of Columbia, which are all dependent upon a depleted pot of federal money.

The state has won some new industries such as the Shandong-Tralin paper mill in Chesterfield County, but the mood is still sour. Recent up-and-comers include Texas, South Dakota and Utah, which are not so dependent upon federal spending.

Two 2014 ratings come to mind. In CNBC’s Top States for Business 2014, Virginia fell from the top slot to tie with Colorado at No. 8. Over at Forbes’ Best States for Business in 2014, the Old Dominion also took a spill from No. 1 to No. 4.